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Mining in Australia

Mining-report

Current mining situation

Mining has been one of most important industries for the Australian economy since the mid 1800s. With more than $260 billion currently invested in new projects and those being expanded,  the industry should remain in that position for the foreseeable future. Australia is the world's largest exporter of coal, iron ore, bauxite, alumina, lead, and zinc.  It is also a leading exporter of uranium, diamonds, gold, copper, nickel, and liquid natural gas (LNG). According to the Bureau of Resources and Energy Economics (BREE), in 2010/2011 the resources sector generated a record $190 billion in export earnings; a 14 per cent increase on the previous year. Earnings from energy and mineral commodities are expected to increase to $210 billion in 2012/2013. This is due to the resource price recovery since the Global Financial Crisis (GFC).

 

Where is the resource wealth?
Issues affecting the industry
The future of mining in Australia

Employment
Wages/salary

Locations of resources jobs
Mining Lifestyle
Major employers

Useful links

 

Where is the resources wealth?

The highest export earner in the resources sector is iron ore, followed by coal, then gold. However, LNG, alumina, and gold have shown the most growth in export earnings over the past two years are.  Investment of more than $170 billion in LNG projects should establish Australia as the world's biggest exporter within the next 10 years. Overview of Australia's resources and energy exports:

 

Commodity

 

2010-11 ($m)

 

2011-12 ($m)

 

Growth %

Alumina

5,507

7,144

29.7

Aluminium

3,839

3,374

-12.1

Copper

8,418

9,043

7.4

Gold

15,558

19,722

26.8

Iron ore

62,788

66,936

6.6

Nickel

3,902

4,138

6.0

Zinc

2,263

2,331

3.0

LNG

12,392

16,037

29.4

Metallurgical coal

30,310

29,682

-2.1

Thermal coal

17,358

18,590

7.1

Oil

13,012

13,319

2.4

Uranium

732

799

9.2




source:
Bree


Why such fast growth?

Since 2005, the mining industry has experienced a 'boom' thanks to the strong demand for mineral resources from the world's two largest developing countries, China and India. This increase in demand pushed up the price of commodities, increasing resources revenue even more, until the GFC hit. Nevertheless, add in the high Australian dollar (more or less above US$1 since October 2010), and the mining industry has seen record growth in recent years. More than 40 per cent of resources industry revenue is generated in WA. Queensland is the next biggest player, contributing around 30 per cent of total earnings.


There are currently more than $260 billion of projects under construction. Examples include Chevron's $43 billion Gorgon project set to employ 10,000 in the construction phase and 3,500 full time staff afterwards, and the $30 billion Wheatstone LNG project in Western Australia.


Issues affecting the industry

Skilled labour shortage

The Australian mining industry has been suffering a severe shortage of skilled labour since 2007. A March 2011 DEEWR survey found that labour shortages existed in all categories except metallurgy. The key shortages were in the following areas:



  • Automotive electrician
  • Electrical Engineer
  • Electrician
  • Fitter
  • Geologist
  • Metal machinist
  • Mine deputy


  • Mining engineer
  • Motor mechanic
  • Petroleum engineer
  • Plumber (general)
  • Production engineer (mining)
  • Production manager (mining)

 

These shortages will increase as the current multi-billion dollar investment in new projects enters the peak construction phase. The Australian Mines and Metals Association forecast that the mining industry have a deficit of 40,000 workers by the end of 2013.

Professional services firm, Pricewaterhouse Coopers, interviewed 30 senior executives in the Australian energy and resources sector for its June 2012 report, Mind the Gap - solving the skills shortages in resources.

Five key reasons for the shortage of skilled labour were indentified:

 

Skills-shortage-reasons

 

Source: PWC; interviews with 30 senior executives in the energy & resource sector


In an attempt to address the skills shortage, the Federal Government introduced Enterprise Migration Agreements (EMAs) in 2012 to allow companies to hire skilled migrant workers on a temporary 457 visa. EMAs are only available on projects with capital investment greater than $2 billion, with a workforce of more than 1,500 people.

The government awarded the first EMA to Hancock Prospecting in May 2012. The company employed 1,715 foreign workers on 457 visas for its $9.5 billion Roy Hill iron ore project in Western Australia's Pilbara region.

Mining Resources Rent Tax (MRRT)

The Federal Government's Mining Resources Rent Tax was introduced on the first of July 2012 as a means to give the people of Australia a greater share of the profits that mining companies are making from government land. The tax is levied on companies at a rate of 30 per cent once they reach $75 million in annual profit.

Many mining companies have criticised the tax in the press, through public demonstrations, and via a television advertising campaign. They have argued that the MRRT will slow investment in new projects and lead to widespread job losses.

However the Managing Director of Barrick Gold's (the world's largest gold producer) Australian operations has said that the imposition of the tax does not significantly impact the company's operations. Read more

The MRRT is also supported by the Australian Council of Trade Unions (ACTU) and the largest union in the mining industry, the Construction, Forestry, Mining, and Energy Union (CFMEU).

High cost of living in mining areas and FIFO workers

FIFO-workersIn June 2021, Marius Kloppers, the CEO of BHP Billiton, the largest mining company in the world, said that the high cost of living in mining areas was an obstacle for the company in attracting and maintaining workers.

The mining companies have blamed the high cost of living on the exhorbitant rents charged by landlords in towns close mining areas. This creates discontent for people in the towns, who are not earning the high incomes of the mining industry workers.

In order to attract workers, the companies have implemented fly-in-fly-out (FIFO) schemes for many staff. Some mines in remote areas of Australia have a 100 per cent FIFO workforce.

FIFO workers live outside the mining areas (some workers in WA even live in Bali) and live in on-site 'villages' for the period they are at work. Many villages have facilities such as swimming pools, cinemas, bars, golf driving ranges, and tennis courts.

FIFO workers for Rio Tinto are paid a travel allowance on top of their base salary, and usually work two weeks on (12 hours per day), one week off, with six-weeks annual leave. The company pays for all accommodation, meals, and transport while on site.

Impact of Fly-In Fly-Out/Drive-In Drive Out Work Practices on Local Government, a May 2012 report by the Australian Centre of Excellence for Local Government (ACELG) identified some positive aspects of FIFO work:

  • High wages and low living costs.
  • Large amounts of continuous time with family and friends when not working.
  • A high level of empowerment among the partners of FIFO workers.

However, the large amount of travel involved with FIFO work, and the long periods of time away from loved ones can place stress and fatigue on employees. A May 2012 report by research firm, Kinetic Group, found that the rate of FIFO staff turnover is more than twice the average for the resources industry.

A 2012 Griffith University study into the physical and psychological effects of shift work in the mining industry revealed a higher level of short-term illness among its employees than in the general population.

The Australian Medical Association has also blamed bored FIFO workers with high disposable incomes on the increase in sexually transmitted illnesses (STIs) in Queensland. Just as mining industry workers operate on a FIFO roster, sex workers in towns close to mines have become FIFO as well.

The negative impacts of FIFO work have created something of a quandary for mining companies, as they have little or no choice but to use this system.

High level of unionisation

Union-strongThe resources industry has a long history of unionism. The most powerful of these is the Construction, Forestry, Mining, and Energy Union (CFMEU) which has around 120,000 members. The industry's other major unions are the Australian Workers' Union (AWU), and the Australian Manufacturing Workers Union (AMWU).

Among the responsibilities that unions assume for their members are negotiating wage increases and monitoring workplace health and safety.

The unions are against the government's Enterprise Migration Agreement (EMA) scheme to allow temporary visas for skilled migrants to workin the mining industry. In May 2012, the Australian Council for Trade Unions (ACTU) voiced its opposition to Hancock Prospecting's plan to bring in 1,700 migrants on 457 visas to work on the construction of its $9.5 billion Roy Hill iron ore project in WA.

The mining company claimed that it was unable to find enough Australians to fill the positions but the unions argued that the move was a ploy to reduce the level of wages and working conditions. They have also said that bringing in migrants denies workers in industries with under-employment, and indigenous Australians, the opportunity to be trained as skilled labour.

Fair Work Act (2009)

The Federal Government's Fair Work Act (2009) (http://www.fwa.gov.au/index.cfm?pagename=legislationfwact), was introduced as a platform to provide workers with a more powerful voice in their wage negotiations with employers; also known as collective bargaining.

The interests of workers in these wage negotiations are represented by unions. With the mining industry being so heavily unionised, mining companies have claimed that they have been hindered in setting up new projects because the wage demands of the unions have been unreasonable.

Decline in productivity

In recent years the mining industry has seen the greatest decline in productivity levels of all industries in Australia. It nevertheless remains the most productive industry in the country i.e. has the highest level of output per worker. In August 2012, Australian Treasurer, Wayne Swan (http://www.skynews.com.au/businessnews/article.aspx?id=783752), stated that the mining industry will be the primary driver of productivity for the entire economy in the coming years.

Factors that have contributed to the decrease in productivity include:

  • An increase in commodity prices in recent years has led to an increase in the general level of investment in the industry. Generally, mining projects require a higher level of human capital (workers) during the construction phase, when nothing is actually being produced. This impacts negatively on productivity figures, but only for the short term. Once production begins, and the number of workers required is lower, productivity corrects itself.
  • The rise in commodity prices has also led to the exploration and extraction of resources in areas that are remote or more difficult to access, at a much greater cost.

Coal seam gas

Coal-seam-gasA growing, but controversial, sector of the gas industry is coal seam gas (CSG). It has created thousands of jobs, and is now an $11 billion industry, but there are concerns about the industry's growth prospects. One of the methods of CSG extraction, known as fracturing, or 'fracking', has also raised alarm about its impact on the environment.

The vast majority of CSG extraction occurs in Queensland, where there is currently around 2,500 wells. In 2010 it was estimated that the industry would eventually export almost 60 million tonnes of LNG per year, however, rising gas prices, the unreliable nature of CSG extraction, and unsuccessful exploration mean that exports may be limited to 25 million tonnes.

The Queensland Government has angered a section of the farming community by granting leases to mining companies on privately owned land. Technically, the government is able to do this as they own what is underground.

As happened in the US, the process of fracking can also contaminate groundwater if the gas leaks from the coal seam. The extraction process also produces a large amount of chemical salt as a waste product.

Furthermore, it has been estimated that the CSG industry will draw around 300 gigalitres per year from the Great Artesian Basin, which runs under Queensland, NSW, the Northern Territory, and South Australia. An accidental release of CSG chemicals into the basin occured in 2009.

 

The future of mining in Australia

skilled-labour

DEEWR projections to 2016/17 show that mining will be one of the top growth industries in Australia with yearly growth of 7.5 per cent and an extra 104,000 jobs created. However there are a number of factors that will influence the extent of the growth.

 

  • Demand from China. Although China's economic growth slowed slighty in the first half of 2012, it has shown record growth for some time and a minor slow down is not seen as a major concern. However as much of the current $260 billion investment in the Australian resources sector is reliant on continuous Chinese demand, further slow downs could be problematic.
  • Whether the skills shortage can be addressed. The National Resources Sector Employment Taskforce has descrbed a worst-case scenario of a shortage of 36,000 jobs by 2015. It remains to be seen if the Enterprise Migration Agreement (EMA) scheme will be a success.
  • Iron ore, which represents more than 40 per cent of the the Australian mining industry, is susceptible to variations in worldwide construction and therefore demand for steel.
  • World commodity prices remain sluggish in the aftermath of the GFC. Until domestic demand in the US and expansion in China picks up again, commodity prices are not expected to rise significantly.
  • Increasing competition from Africa. Australian resources currently have $24 billion invested in Africa with another $23 billion in the pipeline. With some resources such as lead, uranium, and nickel in decline.


Employment

The Australian resources industry generates approximately eight per cent of GDP and employs around two per cent of the working population.

Department of Education, Employment, and Workplace Relations (DEEWR) figures show that mining experienced the highest employment growth of any industry in Australia for the five years ending February 2012, with an average annual increase of 12.8 per cent.

In 2010/2011, employment grew 19 per cent, thanks to the strong demand for iron ore and coal. Mining industry employment fluctuates according to the number of new projects in the pipeline. It is importnant to note that more employees are needed during the construction phase of a resources project than in the subsequent operational phase.

The chart below shows the growth in mining industry employment for the 20-year period ending May 2012, when it reached a peak of 269,300 employees.

 

Industry-employment


Source:
ABS 6291.0.55.003


According to the Australian Bureau of Statistics (ABS) June 2011 Labour Force Survey, the top three sectors for employment within the mining industry are:

 

  • Metal Ore Mining;  71,700 people;  34.8 per cent
  • Coal Mining;  48,500 people;  23.6 per cent
  • Exploration;  27,300;  13.3 per cent


The top 10 areas of employment within the industry Australia-wide are:

 

Drillers, Miners & Shot Firers

Metal Fitters & Machinists

Truck Drivers

Electricians

Other Building & Engineering Technicians

Production Managers

Earthmoving Plant Operators

Mining Engineers

Geologists & Geophysicists

Other Construction & Mining Labourers

 

45,400

23,300

10,600

8,600

8,000

6,100

5,900

5,300

5,000

4,900

 

Source: DEEWR Special Order based on ABS 6291.0.55.003 - Average 2011.

 

Employment profile

Employmen -profile

Source: DEEWR 2012

Wages/Salary

The chart below shows the relative median weekly full-time before-tax earnings of the different sectors in the mining industry. The median weekly wage for the entire industry, as at February 2012, was $1900.00 AUD.

 

Salary-average


Source:
ABS Employee Earnings, Benefits and Trade Union Membership Cat. no. 6310.0 (August 2010, custom request data).

Claiming expenses

There are certain expenses that mining company employees can claim through the tax system such as operating licences, tools, and union fees. The Australian Tax Office (ATO) website has a list of expenses that can be claimed.

 

Locations of Resources Jobs

Most of the mining activity in Australia occurs in Western Australia, where 8.5 per cent of the workforce is employed by the mining industry; predominantly the iron-ore sector. Queensland is the next largest mining state with 4.2 per cent of the workforce in mining related jobs. NSW in a distant third place by industry size, with 2.6 per cent of the working population employed. Most mining industry workers in Queensland and NSW are employed in the coal sector.

The chart below shows the contribution of each state and territory to total resources employment in Australia. As at May 2012, approximately 270,000 people were employed by the industry.

 

Mining Employment by State

Employment-state

Source: ABS 6291.0.55.003


Mining Employment by Region (000s)

year to February 2012­

Perth (Western Australia)
Central & North Queensland
Greater Western Australia
Brisbane (Queensland)
Hunter (New South Wales)
Western New South Wales
Sydney (New South Wales)
Melbourne (Victoria)
Southern Queensland
Adelaide (South Australia)
Northern Territory
Tasmania
Country South Australia
Western Australia
Southern New South Wales (including ACT)
Northern New South Wales
Eastern Victoria

61
36
35.4
19.6
14.5
11.8
9.1
7.6
7.3
5.8
4.2
4.1
4.0
2.8
2.1
1.8
1.8

 

Source: ABS 6291.0.55.003

 

Mining Lifestyle

Resources staff generally have two options for employment - residential living in a mine town or Fly-In-Fly-Out (FIFO) /Drive-In-Drive-Out (DIDO).

Residential living in a mine town

Mining-familyMine towns attract workers with families. The towns generally expensive to live in, remote, have a young population, and there is often a big 'line' between locals and mine staff. However, mine towns allow workers to live full time with their families.

Over the past years, the cost of living in mine towns is getting more and more expensive. Mine staff are paid salary packages far higher than most locals, and drive up the cost of accommodation; often pushing the locals out. In fact, to deal with the lack of accommodation in some towns, a new phenomenon called 'bed hopping' has evolved. Over a 24 hour period, 3 miners will sleep 8 hours each in the same bed! The remote nature of the towns also results in high costs for petrol (gasoline) and food. 

Pros and cons of life in a mine town are as follows:

 

PROS

  • Good salary: average is $65,000
  • Build longer-term friendships
  • Many towns have new and modern facilities
  • Live in your own home
  • Standard hours of work - although it is shift work
  • Interaction with your family daily

CONS

  • High turnover/transient life
  • Town can be 'soulless'
  • Expensive to live there -rents can be higher than in major cities
  • Lack of choice in services like medical and shopping
  • Harsh, often hot, landscape
  • Locals often resent you and your family
  • Education for children is often lacking

FIFO/DIDO

FIFO-DIFOUnlike living in a mining town, Fly-In-Fly-Out (FIFO) arrangements require workers to fly to remote mine sites for the full period of their shift work. The then fly to their chosen location on their rostered days off. In Western Australia (WA) FIFO, and the less common Drive-In-Drive-Out (DIDO) account for 50% of the resources sector… about 50,000 workers. Mining companies provide accomodation, meals, cleaning, and recreation facilities for workers while on site. FIFO/DIDO numbers are expected to increase in coming years as mines sites expand, and mining camp numbers increase.

Pros and cons of the FIFI lifestyle are as follows:

 

PROS


  • Earn a high salary
  • Have more job  opportunities
  • Good breaks with family
  • Low cost of living when in the camp - rent and food are covered by the company
  • Some camps are very modern with great facilities including gyms, pools, and driving ranges. Workers live in self-contained huts called 'dongas', often with an en-suite bathroom.
  • Good communication to stay in touch - Skype and phone

 

CONS

  • Hard on family relationships
  • Exhausting lifestyle with a lot of travel
  • Some mining camps are old and out of date
  • Male-dominated culture - reports of bullying, prostitution, & drug/alcohol abuse
  • Isolation and loneliness resulting in depression - suicide rate  is 70% higher than the national average
  • Harsh and hot landscape

Major employers

This list of employers is by no means exhaustive; we recommend you do further research to find all the employers in your relevant sector.

 

 

 

Useful links

This list is a good source of links for researching your career, and for further information on the mining industry in Australia.

 

Association of Mining and Exploration Companies (AMEC)
Austmine
Australasian Joint Ore Reserves Committee
Australian Aluminium Council
Australian Atlas of Mineral Resources, Mines and Processing Centres
Australian Bureau of Agricultural and Resource Economics
Australia Coal Association
Australian Institute of Geoscientists
Australian Institute of Mining and Metallurgy
Australian Institute of Petroleum
Australian Mines Atlas
Australian Petroleum Production and Exploration Association
Australian Securities Exchange
Department of Resources, Energy and Tourism
Galvanizers Association of Australia
Geoscience Australia
Government of Western Australia Department of Mines and Petroleum
International Lead and Zinc Study Group
Minerals Council of Australia
Uranium Information Centre
World Diamond Council

 

Good luck in your job search!